Impact of Edible Oil Import on GDP Growth in Bangladesh: A Panel Analysis

Abstract

Oil is one of the major imported products and an essential factor in the aggregate production function of Bangladesh. The objective of this study is to see the trend of selected 11 edible oils imports and the effect of selected edible oils imports on GDP growth in Bangladesh. The study uses a secondary data of 26 years for the period 1995-2020 obtained from “The Yearbook of Agricultural Statistics”, published by the National Statistical Organization (NSO) and Bangladesh Bureau of Statistics (BBS). Descriptive statistics and econometric techniques are used to determine the trends of edible oils imports and to evaluate the effect of edible oils imports on GDP growth in Bangladesh. In descriptive statistics, it is observed that money value for import of selected edible oils and quantity of imported selected edible oils are volatile in the whole study period 1995-2020. Trends of imports of selected edible oils in Bangladesh are sighted overall increasing pattern with irregular fluctuations in the study period but imports of mustard oil has a decreasing trend in the same period. The study also found that the considered data has no serial correlation and non existence of heteroskedasticity. The research work has fitted a fixed effect panel regression model with robust standard error for the considered data. Wald test and Hausman test also conferred to fit the fixed effect panel model. The work shows that the money value for import edible oils and quantity of imported edible oils have a negative relationship with GDP growth in Bangladesh. This might be happened due to continuous increasing the price of USD against BDT that results devaluation of BDT which directly impact on imports.

Key Words: Edible Oil, GDP, Panel Analysis, Hausman Test, Fixed Effect Model.